Duetsche Analyst Blew the Whistle When Asked to Change Numbers in Miami Foreclosure Cases

ProPublica recently reported that another bank, this time Deutsche Bank AG, has been caught altering information on underwater Miami foreclosure cases in order to try to make investments seem better than they really were.

The news agency reports that a junior analyst at Deutsche protested when bosses asked the analyst in 2007 to alter numbers in a spreadsheet to make Deutsche investments seem less risky to ratings agencies.
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Our Miami foreclosure lawyers think this sounds familiar. In fact, we reported on our Miami Foreclosure Lawyer Blog in September and October about how Countrywide employees revealed that they found bank officials at branches were literally cutting and pasting documents together in order to steal people’s homes away from them in Miami foreclosure cases.

These stories continue to show that banks cannot be trusted and that their interests are in complete opposition to the interests of homeowners. Banks desire to make as much money off of foreclosures and homeowners must consider strategic default, a short sale or perhaps fighting back if their mortgage is underwater.

According to ProPublica, a mid-level executive asked the analyst to make it seem as if the mortgage-backed securities would produce more cash than the bank expected. This was at a time when the foreclosure bubble was bursting and fewer people were investing.

Banks were attempting to convince ratings agencies to give them the AAA ratings approval to show investors — who were becoming skittish about investing — that they posed low risk. The analyst was asked to change the spreadsheet to improve the rating.

The protest by the analyst sparked an internal investigation and the bank, of course, denied any wrongdoing. Neither the S.E.C. nor any government regulator has interviewed the analyst, some four years later. It begs the question of how closely the bank was being watched. ProPublica reports that two of the SEC’s main players are former Deutsche Bank officials.

Analysts worked on CDOs, or collateralized debt obligations — securities underpinned by mortgages that the bank sold to investors. In 2006 and 2007, this wing of the bank was busy, with employees working until 1 a.m. before being driven home in company town cars. Analysts would create spreadsheets that “modeled” or projected how the investment would perform.

The spreadsheets were so complex they could take minutes to open on a computer, requiring sophisticated calculations in order to show the investor how the investment would grow at certain time periods.

Even at a time when the banks knew mortgages were falling into foreclosure based on unemployment numbers rising and when the prices of houses were spiraling downward, these banks were trying to sell these risky investments they knew weren’t going to pan out. So, what do they do, allegedly? They alter the numbers.

News reports have shown these same banks altered numbers in Miami foreclosure cases in order to prove to judges they should be able to take the house or to show how much is owed. They will stop at nothing to make a dollar, even at the expense of homeowners.

If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.

More Blog Entries:

Bank of America Punishes Employees For Spotting Miami Mortgage Fraud: October 5, 2011
Former Countrywide Employees Say Company Covered Up Fraud in Miami, U.S.: September 24, 2011
Additional Resources:

Deutsche Analyst Sounded Alarm When Asked to Alter Numbers, by Carrick Mollenkamp, ProPublica